Government rules on claiming Jobseeker’s Allowance (JSA) risk undermining business attempts to give more young people work experience, Personnel Today has learned.

Under current rules, out-of-work youngsters looking for unpaid work experience have to give up JSA unless they arrange a placement through Jobcentre Plus, with experts claiming this puts people off proactively seeking positions.

But the Department for Business (BIS) told Personnel Today that unless people arranged work experience through the government’s flagship jobs service, they were ineligible for unemployment benefits.

John Bateman, chief executive of work charity UK Youth, expressed disappointment with the policy. “I cannot see the logic in this,” he said. “Where is the incentive for the young person to seek unpaid experience?”

He added the majority of work experience placements were arranged privately, away from the bureaucracy of dealing with job centres. “We should be encouraging people on JSA to develop their skills to access employment; anything that is a disincentive to that is rather strange,” he said.

Liberal Democrat shadow work and pensions spokesman, Steve Webb, added: “It is counterproductive to exclude young people from claiming JSA when they want to undertake work experience and internships. It ensures unpaid opportunities in the workplace are only enjoyed by the better off.” Instead, the party would introduce a training allowance of £55 a week for those on work experience so people from all backgrounds could improve their skills, he said.

Business groups also called for the rules to be changed. Katja Hall, CBI director of employment policy, said work placements should be encouraged, particularly given the difficult jobs market. “While the government must ensure benefits are not abused, it should look again at the current rules,” she said.

Chartered Institute of Personnel and Development skills adviser Tom Richmond added: “The last thing we need is another artificial barrier acting as a disincentive for young people to get work experience.”

Employers pledge more work experience: Stuart Rose interview

More than 100 high-profile employers, including BT and National Grid, promised to offer more work experience to young people last week at an event organised by employers’ membership group Business in the Community.

“At M&S, we will stretch our budgets and probably take on more people than we need to give work placements to, to help do our bit to get through the crunch. If every business did that, it would make a difference.”

A BIS spokeswoman said: “JSA is paid when work experience goes towards a person’s career. If Jobcentre Plus finds it for you, then it’s fine. We don’t want the public purse to be going towards [privately arranged] experience that could last for weeks that a company should be paying for.”

Earlier this month, the government launched the Backing Young Britain campaign, which called on business to offer young people voluntary work, work experience, internships or apprenticeships.